China cites harsh business environment after I-T searches on Chinese firms

The operations of Chinese firms remain normal at the moment, but relevant companies are looking to reassure their Indian employees as the investigation has caused some concerns, a report said

The Indian government should protect the legitimate rights and interests of Chinese firms in India, Chinese analysts urged, as New Delhi launched probe into multiple Chinese companies on tax and income issues, Global Times reported.

The operations of Chinese firms remain normal at the moment, but relevant companies are looking to reassure their Indian employees as the investigation has caused some concerns, the report said.

The investigation has not been concluded yet, but some Chinese experts reiterated on Thursday that the business environment in India is harsh, not only for Chinese firms, but all foreign companies, the report said.

They pointed out that "non-market factors" in India will have large and unpredictable effects on them and cause many problems, and many Western companies have already pulled out from the country for this reason, the report added.

They urged Chinese firms to be cautious in investing and doing business in India, and strictly follow the local laws and leave no excuse for the authorities to take actions against them if those companies choose to stay there.

More than 20 premises in the National Capital Region (NCR), Mumbai, Rajkot and Karnataka linked to Oppo and Xiaomi were searched by the tax department on Thursday. Searches were also conducted at the offices of OnePlus, the Chinese company that has merged into Oppo but operates as a separate brand.

"India's tax laws are very complicated, and in recent years, many Indian companies and some joint venture enterprises have also been investigated over tax issues," said Qian Feng, director of the research department at the National Strategy Institute at Tsinghua University in Beijing.

Although the latest investigation seems likely to have been mainly driven by economic reasons, the possibility of a political impact still exists, because there are extreme anti-China forces in the government, and they will look at matters related to Chinese firms in India with a discriminatory attitude, Qian said, as per the report.

Lin Minwang, a professor at the Institute of International Studies at Fudan University in Shanghai, told the Global Times that "the investigation is not a surprise at all, because the Indian authorities, especially those in some local governments, don't care about how Chinese firms feel because they are pushing for 'decoupling with China' and they see Chinese firms as perfect targets, and they don't care how Chinese investors will look at the business environment in the country".

In a statement sent to the Global Times on Thursday, a Xiaomi spokesperson said: "As a responsible company, we give paramount importance to ensuring that we are compliant with all Indian laws. As an invested partner in India, we are fully cooperating with the authorities to ensure they have all the required information."

Along with Chinese vendors, their contract manufacturers were also subject to searches. Foxconn said that it is looking into the matter.